t was a mixed day for trading in the US. Indices struggled to make further headway into all-time high territory, but didn’t fall off the table either. There was more action in currency markets where FOMC minutes sent USD into a nosedive enabling other currencies to rebound.
There weren’t any huge surprises in the minutes. Fed members indicated that should the economy continue to perform well, they would be ready to raise rates again “sometime soon”. Some members also expressed concern that referring to gradual increases could be misread as one or two rather than the current party line of three for this year. The usual hedge comments about reacting to changing conditions were also in there. Traders reaction to the minutes indicates they were seen as neutral to slightly dovish in that the Fed is still leaning toward three hikes this year, not the four or five that have been priced into USD. The Fed also doesn’t appear to be in a hurry to raise rates in March even though some members think moving sooner would give them more flexibility to react to changing conditions.
Earnings reports also continue to drive significant swings
in specific stocks. Garmin soared 7.3% on big earnings and a big deal with BMW while First Solar was hammered for an 8.4% loss following its earnings report. Solar stocks were out of favour in general with Canadian Solar falling 8.2%. After the close today, Tesla Motors reported a worse than expected loss on lower than expected margins. Canadian stocks fell, dragged down by the energy sector where EnCana fell 5.8%, Cenovus fell 4.3% and Penn West fell 3.4%. Retailers held their ground despite a disappointing Canadian retail sales report for December.
Energy stocks and commodities could dominate trading over the next 24 hours with the latest round of weekly US inventory reports due. US inventories have grown by leaps and bounds in recent weeks raising questions of whether OPEC cuts could be offset by higher US production. Late in the afternoon, API reported a 0.9 mmbbl decline, sparking a rebound in WTI. The street is currently expecting a 3.5 mmbbl increase in DOE inventories but the API report suggests that the recent phase of big builds may be ending.
Tesla Motors ($0.69) vs street ($0.53)
Significant announcements released overnight include:
Canada retail sales (0.5%) vs street 0.0%
Canada retail ex auto (0.3%) vs street 0.6%
US existing home sales 5.69M vs street 5.55M
UK GDP update 2.0% vs street 2.2%
Eurozone consumer prices 1.8% as expected
Eurozone core CPI 0.9% as expected
Germany IFO business climate 111.0 vs street 109.6
Germany IFO expectations 104.0 vs street 103.0
Germany IFO current 1118.4 vs street 116.6
Upcoming significant economic announcements include:
(Note: 11:30 am in Sydney/Melbourne is currently 1:30 pm in Auckland, 4:30 pm in Vancouver, 7:30 pm in Toronto/Montréal, 12:30 am in London and 8:30 am in Singapore)
4:00 pm AEDT Singapore consumer prices street 0.6%
4:00 pm AEDT Singapore core CPI street 1.3%
7:00 am GMT Germany GDP update street 1.7%
9:00 am GMT Italy retail sales street 0.9%
11:00 am GMT UK CBI retail sales 4 vs street (8)
11:00 am GMT UK CBI distributor sales street 24
8:30 am EST US jobless claims street 240K
10:30 am EST US natural gas street (86 BCF)
11:00 am EST US DOE crude oil inventories street 3.5 mmbbls
11:00 am EST US DOE gasoline inventories street (1.5 mmbbls)
8:35 am EST FOMC Lockhart speaking
1:00 pm EST FOMC Kaplan speaking
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